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Samsung grabs Sharp shard, brings pain to Apple supply chain

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Samsung has shipped up in Apple's pitch by taking a three per cent stake in cash-strapped component supplier Sharp for ¥10.4bn ($111m).

Instead of top iDevice manufacturer Foxconn nabbing a bit of Sharp, an idea that had previously been floated, the fruity firm will see Sammy screens being made side by side with its own components. The share purchase means Samsung can now be sure of a secure supply of LCD panels from Sharp.

Sharp is framing the deal as a "strengthening of the LCD business alliance" between the two firms, a phrase that hints at bolstering both Samsung's growth in tellies as its Japanese competitors have lost ground and its newly minted status as a leading mobe maker.

Chai-Gi Lee, research director for Gartner in South Korea, told The Register that things had changed for Samsung since its Galaxy range clawed their way to the top of the Android device heap.

"The competition paradigm changed when Samsung took the market leader position in several markets including smartphone, TV and so on. Now, the demand for Samsung’s products exceeds the supply limit of Samsung’s components," he said.

While Apple and Samsung duke it out over mobiles, they're also stuck in the rather odd frenemy territory - where the latter company is one of Cupertino's biggest suppliers of chips. Now that relationship is going to become even more complicated, with Samsung also getting Sharp to help with its screen supply while the Japanese company makes other displays for Apple.

"Samsung doesn’t want to source from relatively low quality component manufacturers like in China. So if Samsung has the power to control the supply of qualified components worldwide, it can maintain the market lead over competitors including Apple," Lee pointed out.

It could have all been so different if Foxconn daddy Hon Hai had made good on a deal penned around this time last year to slurp a 9.9 per cent stake in Sharp for ¥66.9bn ($806m, £507m) along with a further 46.5 per cent slice of the firm's joint TV venture with Sony for another ¥66bn.

Hon Hai later backed out of the deal when Sharp's shares took a dive after it announced a dismal billion-yen loss in the second quarter of last year. The companies have ostensibly been in talks ever since to try to revive the deal on new terms, but haven't been able to come up with any solution yet.

Now, along with Samsung, Sharp has managed to get a ¥9.9bn ($121m) injection from Qualcomm and rumours have suggested that Intel or Dell might be interested in a piece of the action too.

With every deal strengthening the floundering firm's position, Hon Hai might have left it too late to get Sharp to agree to a reduced deal. ®

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